If you have a basic understanding of trading or investing or you want to get into the same, you would know that you need a Demat account, isn’t it? So, in this article, you are going to read about the Demat account opening process both online and offline.
The article will also cover the documents required for opening a Demat account and other intricate details that you must know about opening an account.
What is a Demat Account?
The term ‘Demat’ has been derived from the word “dematerialization.” This is the process of transforming all share certificates from a physical to an electronic format. Then these electronic share certificates are held in an account like the money held in your bank account, and that account is known as a Demat account.
For all the shares and other securities you purchase, you need to have a Demat account to hold them. Apart from options and futures, where there is no transfer of shares or other assets, for all other assets, you would need a Demat account.
Why is it Important?
A Demat account is necessary for all kinds of investments made in the share market. Whether you purchase stocks, commodities, mutual funds,or other assets that you will get ownership of and hold, you will need a Demat account for that.
When you purchase a security in the Demat account, it gets credited into the account in electronic format. Then when you sell the same security, it gets debited just like in a bank account.
With the digitalization of the stock market, a Demat account is mandatory as you don’t get physical share certificates to hold. You have to have a Demat account to invest in securities. Even for IPO investment, where the trading account is not required, you would need a Demat account for applying.
Demat accounts offer multiple benefits, and thus it is important to the traders and investors –
- It saves a lot of time as you do not have to run to the stock exchange and brokerage house to get your share certificates and sell them.
- There is no worry about misplacing them or getting damaged due to manmade or natural disasters.
- There is no need to carry your share certificates or put them into a bank locker for safety.
- With time-saving, the Demat account saves your money as well, which you would otherwise have to pay for travel, printing of certificates, photocopies, and other expenses.
How to Open a Demat Account?
So, now you know why you need a Demat account, and you must be thinking about how to open a Demat account. You can open a Demat account with a few easy steps—
- Click on the ‘open Demat account’ tab and fill out the form that pops up.
- Once you submit the form, you will receive a call from the brokerage house.
- Then, they will guide you regarding which documents you have to submit.
- Once you submit the required documents, they will do the KYC verification.
- Once verification is successful, and KYC is completed, your account will be opened with the brokerage house.
- You will receive the account log-in credentials in your registered email along with welcome mail.
- You have to visit the branch of the brokerage house.
- There you have to fill out the application form for the Demat account opening.
- Fill out the form, submit the documents for KYC verification and wait.
- After the KYC is completed, the executives of the brokerage house will call you and inform you about the success or failure of the application.
- If KYC is successful, you will get the account log-in details, and you can start trading.
What are the Documents You Need to Open a Demat Account?
The documents that you need to upload for opening the Demat account are:
- PAN card
- AADHAAR card
- Bank Statement
- Income proof
- Voter Id license, or other documents for address verification
- Others as required by the brokerage house
Eligibility for Opening a Demat Account
The eligibility criteria for opening a Demat account are very liberal. All you need to have is age proof of 18+ years. If you are a minor, your parents/ guardians can open an account on your behalf. You need to have the documents mentioned above. There are no other eligibility criteria you need to fulfill for opening a Demat account.
Opening a Demat account is necessary for investment, and opening one is easy as well. So, if you want to open a Demat account, all you need to do is gather all your documents, open the online site of the brokerage house and click on “Open Demat account’ and fill out the form, and the remaining will follow.